you can buy out of the money option for ten cents and then when the news it's the wire that option is worth twenty or thirty bucks so you make make instant ten million dollars on an investment of twenty thousand dollars and geithner knows this and he's peddling out inside information he justifies it in his own mind by suggesting that he's making a market or adding liquidity those are code words that he uses to hypnotize himself to absolve himself from the heinous crime of undermining the american and global economy and committing acts of financial terrorist why this guy isn't in the state jacket being beaten to death at this very moment i have no idea so this document has come out because the freedom of information request is five years the fed often prints that publishes their stuff five years later so this is five years later now and lacker he was contacted by all sorts of media and he confirmed that yes this is what i heard and he said quote i was aware of this is questions among

a few large banks about borrowing from their discount windows to support the asset backed commercial paper market my understanding was that new york fed president timothy geithner had discussed a reduction in the discount rate with these banks in connection with these initiatives so again the lead up to this august sixteenth six pm two thousand and seven conference the markets have been tumbling. many people were short so the options on the other side would have been very cheap but because everybody was short including our friend karl denninger we'll get to him because he lost thirty thousand dollars on this move. now at the time however so they would have made a huge profit on having inside information about something that was going to be done that nobody else in the market was anticipating member interest rates had not been cut for over a year at that point well to the list of people on the first call basis from

geithner would be of course warren buffett who is a big holder of bank stocks and is a guy people call from the government when they are making these types of moves so here we have a publicly listed company war of berkshire hathaway run by warren buffett and charlie munger and they're engaged in insider trading and as a result they're undermining the integrity of the economy and people are dying people are suffering again so the markets are you could read the markets you can see when the insider trading happens we've talked about this all the time and kaiser part we often note a suspicious activity there was suspicious behavior in the markets a lie bore and many people in the blogosphere many commentators for years had said that the libel rates were clearly being rigged while at the time presenting the s. and p. five hundred fifty point surge courtesy of the illegal geitner leak now this is from zero hedge and i want to just make note of this fact that they say illegal geitner link because on this very leak says quote private disclosure of

confidential market sensitive information by the central bank would be highly unusual but it was not immediately clear it would be illegal again go back to that quote max a legal system that authorizes it these guys at the plunderers create a legal system that authorizes their plunder. right and to go back to john locke and seventeen ninety one he said when the social contract is broken the people must revolt who determines whether or not the social contract is broken it's not the people who are engineer or the break in the social contract by geitner and buffett it's for the people to decide whether or not they determine the social contract has been broken because it's the people who must revolt and here you have a situation where they claim they haven't broken any laws because they change the laws to favor this massive larceny and lawbreaking therefore you have to look at in the context of is the social contract broken are these people who are there to

represent us are they now at risk of being overthrown and any definition of democracy the answer would be unequivocal yes well let's look back at this day so august sixteenth six pm it's a thursday this is when geithner was in this meeting with lacker and ben bernanke discussing the forthcoming reduction in the discount rate this is the rate that only banks get at the discount window when they have to go to the fed to borrow money in a crisis situation of liquidity so. let's look at the charts of the s. and p. five hundred that day you see that here and was there ahead shows what happened on august fifteenth and continued through sixth the sixteenth was an aggressive bout of selling that took the s. and p. from thirteen ninety down to thirteen sixty at the close of the prior trading day and subsequently sent it lower by another thirty points to thirteen thirty at just about two pm eastern time what happened next would have otherwise remained a mystery if not for the declassification of the fed's two thousand and seven

transcripts because suddenly out of nowhere and unprecedented bow of buying started with no news to serve as a catalyst the buying sent the s. and p. soaring by some fifty points in the span of an hour so that was two pm eastern time on thursday august sixteenth at six pm eastern time aug sixteenth jeffrey lacker was telling tim geithner i've heard that you told these bankers that you're going to cut the discount rate you said no i didn't say anything wasn't me. right want to give me an idea to profit from this as a broker the way i would have played it and had done this myself many times is that you buy in s.p.x. futures contract option and you buy thousands of them for ten or twenty cents and then you don't give the account number. when the news comes out if the news is as you heard it should be from the insider sources you keep to trade yourself you make

ten twenty million dollars if the news is incorrect then you give the account number for a pension account somewhere the teacher's union the firemen's union and you bury that pension account and you of course bribe the compliance officer and you bribe the sales manager and a case of paine webber you have to bribe actually the c.e.o. at some point to cover the tracks of all of this what's called look back trading so it's no lose trading it's insider information is a wealthy man because he's a fascist pig and he works for a fascist pig run out of a big giant house in washington full of fascist pigs so the next day august friday aug seventeenth two thousand and seven at eight am they announce that they're cutting the discount rate it's shock the markets they did it before trading here is flipped out friday from market tickers karl down injure he was short the market because it was due a massive fall as we know despite all of their intervention despite all of their insider trading the markets did crash mightily over the next eighteen months well

he lost thirty thousand dollars and he goes over there are only two possible explanations one. there oh one or more banks that are literally about to suck water remember he's writing this law during two thousand and seven before all the banks did suck water to the fed light out right to wall street and to the public and intended to do this all along knowing full well that the statement pool made on the matter was false he's referring to the st louis fed president william poole who had only said a few days before this act this move by timothy geithner and ben bernanke to cut the discount rate he had publicly said to the media to therefore the investing population that he saw no reason for the fed to cut rates so of course at the time karl denninger was caught out but he's thinking that all of wall street is cut out because of course he didn't even suspect that they were actually rigging the game for tim geithner's buddies well code that i'm sure is

a keen observer of the market and he digs down deep into the architecture of the options market and the fed funds rate so he can see quite clearly through volume what's going on who's doing what and he's an informed sophisticated trader and the fact that someone like this would be bamboozled by insider trading by geithner of course it evokes the response of discussed and horror because it is not just about a guy trading on inside information it's about the secretary of the treasury wrong the country under the bus and then urinating on it like some u.s. soldier on the taliban well yeah and at the time timothy geitner was the president of the new york fed so he was the one responsible for regulating these banks not facilitating their crime wave and he went on to say and by the way the rally yesterday the one we just showed in the chart. i'm forced to be suspicious of it

being ignited by a leak short covering in the financial zone i'm not so sure anymore maybe more like someone being tipped off right well was the phrase market making is used by lloyd blankfein or j.p. morgan we saw this with the london whale last month and j.p. morgan puts on thousands of trades and the ones that are profitable they cherry pick and they stick in their account the ones that are losers they put the government account that put in a pension account they put in some portion of customer account and this goes on without any interruption until such time as there is a bit of a mix up and they have to declare some kind of a loss but this is what i call that a juror is observing he's saying that there are thousands of trades out there they're all bogus they're all being put on by insiders who have no risk at all in any of these transactions they simply cherry pick the ones that are winners they put all the losers into the public's pocket and they never get charged that as bost yet said it's looting has become the de facto method of governance the

government in the u.k. it's the same thing cameron is a looter he's a looter that's the way that they they pension accounts are being looted the economy is being looted and then they try to pass that off as an acceptable form of government while stacey over thanks so much being on the kaiser report thank you stay tuned for the second half i'll be speaking with stephen a ramírez former enforcement officer what the f.c.c. . could you take three. or three. three three. three. two two three. three. four year media projects free media oh don carty. dot com you.

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welcome back to the kaiser report on max kaiser time that it's turned to stephen a romero as he's a professor at loyola school of law and author lawless capitalism for us or

professor umair as was previously at the resolution trust corporation and also out in force an attorney with the securities exchange commission. professor welcome to the kaiser report. thank you max thanks for having me all right let's start with an f. global one of the most audacious crimes in the finance sector last year john karzai is of course x. calm and sax next governor of new jersey and a big fundraiser for obama did it get away with a crime and if so what's crime or crimes professor. well as i often tell my students merrick's the only way to know for sure someone's guilty of a crime is to take it to a jury and wait for it and see what the jury says in terms of whether or not there is evidence beyond a reasonable doubt but subject to that yes it certainly looks like someone got away with a crime when i was at the securities and exchange commission we as part of our enforcement program monitored broker dealers and one of the fundamental things we tried to

achieve was to make sure the broker dealers never read a customer perspective of trading so that should never happen the fact that it happened is bad enough but worse yet is the fact that a politically connected very powerful individual completely escapes prosecution as does everyone associated with this one that does not pass the smell test there is something wrong with our system of criminal justice when i am a global can happen right before the world's eyes and money can disappear from customer accounts and no one traces any criminal are accountability what so ever that's an outrage. going back to the resolution trust corporation and the crimes of the savings and loan crisis their response by the industry after that scandal of the eighty's early eighty's was to change the law to make it easier to commit massive fraud sunset of trying to curb abusive behavior the lobbyist for wall

street were allowed to change the laws to make it easier to commit abusive behavior and the abuses have gotten much bigger much more leverage much more fallout bigger a bailout and destruction of the economy let me ask you this. fessor being a well rounded intellectual if we go back to seventeen ninety and the words of john locke when the sol civil contract is broken the people must result if we have bankers writing the laws to give them the ability to commit and i'll call it john karr's i committed massive fraud and massive criminality and when you let this happen hasn't a social contract itself be broken your thoughts professor yes i agree or hardly macs are or even take it a step further it's not just the social contract in the united states that is is at stake here it is capitalism itself and it's capitalism on a global scale and so yes i agree with locke that once the social contract is reproach in the way that it has been in the united states over the last three or

four decades that's a huge problem but a bigger problem that is we currently have a global economy we're smart qadri are individuals who control bassed well are now about will walk they only they can change the law they dominate the law that's a scary reality and if i'm correct on that pieces then we can expect huge economic costs for the ninety nine point nine percent of us who do not enjoy criminal immunity and don't have a lobbyist on our street. follow that to demonstrate how preposterous this financial terrorism and co-option of the of the rule of law by banks are as has become brower said they wouldn't be pursuing charges against h.s.b.c. for laundering money for drug cartels and terrorist assadi arabia because to do so could destabilize the global financial system your thoughts professor. well i don't think that passes the raph koster i think that's utter hogwash if you want to do

stabilize the financial system as we learned in two thousand and eight our small band of financial elites completely dominate law to be above the law and you'll get clarity of financial instability if you want a stable financial system you need the rule of law investors need to have confidence that when they made brush with decisions it's backed by regal regulatory frameworks that see to it if their investment decisions are not longer and that their arrest but money is not all right well professor let's take a look back over the past ten fifteen years to see how we got here in now it's important to understand the players and the timeline barack obama's replacing now with jack lew who is a known terrorist who has been involved in architecting the system in favor of criminal activity accounting fraud securities fraud let's talk about the history of this was getting rid of glass steagall under clinton or introducing the commodity

futures modernization act under clinton or alan greenspan saying the markets would regulate fraud in other words letting the markets. go without any regulation at all are any of these the most important historical references we can make what's your favorite moment of the past twenty years when we when we can identify as when the terrorists took over the wall street your thoughts professor why you were slow and gradual process it wasn't necessarily sudden there wasn't necessarily an announcement in the new york times like there was with respect to the death of criminal immunity or criminal countability in the financial sector in connection with the h.s.b.c. case but i think you've hit the big ones when we allowed the financial sector to become so large that they have the entire. me or her pharaoh making extort our government officials to get all kinds of goodies and bailouts not available to

other economic actors that was of gigantic stuff were you out there you did a great show yesterday on the river reading were you out these giant too big to fail banks with the backing of the united states government to enter into all these gambling transactions in the derivatives market over the counter derivatives markets i think we were asking for trouble and we got it because they became too big and too interconnected allow our policy or we and our politicians even consider the possibility that what he meant to go into bankruptcy is an option and so after september fifteenth two thousand made as a direct result of the derivatives deregulation initiatives that you've bought in glass steagall we had at least it was perceived that we had little choice but to big growth these giant banks to ands of trillions of dollars to keep them afloat i also think that the deregulation of the mortgage market the lack of enforcement

against predatory mortgages these are my sort of candidates you know rogues gallery of legal indulgences for a week concentrate now professor we see in america the beginnings of a civil war on one hand are the people wielding weapons of mass financial destruction as warren buffet called them and the other side we have people who are clamoring to maintain their gun rights because they want protection against the banks there's the obama administration is telling the people who want the guns to protect themselves against wall street that they have to turn in their guns but he's doing nothing to strut down the terrorists the weapons of mass financial destruction that's going on wall street the banks turns and coordination with banks or c.r. and the city of london and around the world so as this civil war takes shape and make the. a mistake about it with one hundred million americans now added below the poverty line and people understanding that the reason they got there is because of

barack obama and previous administrations family ties to banking terrorism and new york and the city of london were at a point of a civil war how close do you think before outright the shooting began how do you see the stepping up well if i am right that basically our legal system has been taken over by a small cadre of financial elites you would expect more economic pain and as the economic increases in as economic crises as a result of criminality at the apex of our economy become more common people are going to take rigorous action i would suggest to you max that any kind of street fight is not likely to succeed because even with the most potent arms that you can imagine in the hands of individual citizens it's no match to produce in him one tanks and the united states military and even the national guard so i would suggest

that people use the political system and the legal system to take back our economy and that we hope these people accountable pursuant to law rather than any kind of violence i don't think frankly that all the talk about using guns to take on wall street is is likely to even phrase these rocks in the slightest because i think they understand that as long as they dominate the united states government they dominate the united states military and no one is going to be the united states military in any kind of pitched battle whatsoever so consequently i would urge the people sort of what go with the gun issue and think about instead ways that we can challenge power at the polls you know there are still ways i think to support candidates who are very serious about our well being. any actual wheats accountable and growing the power are natural institutions.

appropriated longstreet i think it's still doable politically and you are a real system. now professor there is a another alternative and that is to maybe follow in the footsteps of what germany is doing germany quite clearly has completely lost confidence in what america is doing to stamp out the fraud on wall street so they're taking delivery of their gold their physical gold from new york from france this isn't following in the footsteps of bankers around the world now abandoning the dollar and going to gold and silver as a currency that they can trust that's not completely co-opted and destroyed by what we're seeing on wall street what about the individual does the individual make sense for them to start buying silver perhaps some gold to protect themselves against what's obviously coming up a bond collapse of paper money fear out collapse and total economic and political chaos your thoughts. well i think there's an individual we should keep in mind that

. our economy suffers more and more under the turn of lawlessness identified we do need to take steps to protect ourselves unfortunately those steps to protect ourselves are them starves economically critias economically dangerous because as people lose trust in the system and withdraw capital from the system that more and more with jim and business will suffer and so i i hesitate to advise people or to counsel people to lose complete trust in the system just yet i think we ought to fight for capitalism i think we've got to fight for capitalism in the halls of washington we've got to fight for capitalism in the media we've got a right. we've got to we've got to do things like listen to your show which i think has done a wonderful job of articulating the threats and telling you know other people about the dangers posed dark out was the system i personally believe that capitalism is

worth fighting for politically and through our legal system and that's where we're going to win fair enough all right professor that's all the time we have thanks for being on the kaiser report thank you for having me max ok and that's going to do it for this edition of the kaiser report with me max guys are and stacy herbert our thank my guests professor stephen a ramires if you'd like to get in touch with us you can tweet us a kaiser report until next time backscatter saying. choose your language. clearly we can without any financial literacy skills and. to use the concerns you. choose the opinions that you think are a clue. to the stories that in a. child's access to your office.

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